Personality Traits and Portfolio Tilts Towards Value and Size

Abstract

We show that personality traits are related to an investor’s preferences for value versus growth stocks and for small capitalization stocks versus large capitalization stocks. We have detailed personality trait data and official register holdings of stocks for 710 individuals in Finland. The results show that more extravagant individuals tend towards large capitalization growth stocks; more impulsive people tend towards small capitalization growth stocks; more sentimental investors tend towards small capitalization value stocks; and more social investors tend towards small capitalization stocks with a tilt towards value. The results are consistent when looking at the portfolio characteristics across investors, over time, when using aggregate portfolios of investors with similar personality traits, and both widely held and non-widely held stocks.

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